Westminster International University in Tashkent Lecture 2 Project

Westminster International University in Tashkent Lecture 2 Project Organizational Structure and Culture October 5, 2015 Murodullo Bazarov

Lecture Outline 1. Types of Project Organizational Structure 2. How to Choose Appropriate Project Management Structure 3. Organizational Culture

Case Study - Concord When Britain and France built Concorde (1960 s) the vision of both governments was to pioneer supersonic flight. Even though Concorde was late and overbudget it did achieve its technical objectives by flying at supersonic speed. Initially, Concorde was a commercial failure because it took a number of years landing rights to fly across the Atlantic. However, it eventually became a corporate success as both BA and Air France adopted it as their flagship - the only airlines offering supersonic flights

Case Study – Sydney Opera House The NSW Government’s original vision (1950 s) was for a suitable venue for large theatrical productions. A design competition was held and Jørn Utzon’s innovative design of the Sydney Opera House selected. The building of the Sydney Opera House did not go smoothly; it was late, over budget and reported to be an ‘aesthetic and acoustic disaster’. It was generally deemed a failure from a project manager’s perspective. But now the Sydney Opera House is one of Australia’s national icons and tourist attractions. It is described as a World Heritage building of which UNESCO says the Sydney Opera House is a great architectural work of the 20 th century. It represent multiple strands of creativity, both in architectural form and structural design, a great urban sculpture carefully set in a remarkable waterscape and a world famous iconic building. Therefore, from a client’s perspective the project is considered a resounding success.

Case Study – London’s Millennium Bridge The City of London’s vision (1990) was to provide a means for pedestrians to cross the River Thames between St Paul’s Cathedral on the north side, and the Tate Modern art gallery on the south side, to be opened in 2000 and, therefore to be called the Millennium Bridge. The business case was to build an innovative footbridge that looked like a ‘blade of light’ with suspension below the bridge to give a shallow profile. The bridge was originally built on time, and accepted by the client. It would have been deemed a project manager’s success except that, within a couple of days, the bridge had to be closed due to the excessive swaying movement caused by pedestrians crossing the bridge. The engineers discovered that as people walked across, in step, the oscillation caused was close to the bridge’s natural frequency and produced severe resonance. From a client’s perspective the bridge was initially a failure because it had to be closed, but the bridge was redesigned and stiffened and, finally, 2 years later it was reopened and the client was able to realize the benefits.

Task for Tutorial Consider the following projects from the perspective of stakeholders: 1. The Airbus A 380 super jumbo. 2. The Apple i. Phone

The project organization structure outlines the positions, responsibilities, authorities and accountabilities of all the people involved within the project.

Effective Organization and Communication Highest status Managing Director Manager A Lowest status Department A staff Manager B Department B staff Lines of command feedback Lines of communication Secretary Manager C Department C staff

Types of Project Organizations There are four different ways of organizing projects within the parent organization: § The project as part of the Functional Organization § The project as a Free-standing part of the parent organization § Matrix Organization which is a hybrid of the two main types § Mixed/Hybrid organization

Functional Organization in Manufacturing company Managing Director HR Manager Project coordination Marketing Director Export Sales Manager Export Sales Staff Financial Manager Works Director Engineering Director Home Sales Manager Home Sales Staff Materials Inspector Product Designer Materials Manager Drawing Office Materials Staff Quality Manager Production Engineers Materials Purchase Officer Factory Production Control Factory Supervisors

The Project as a Part of the Functional Organization- ADVANTAGES § There is no radical alteration in the design and operation of the parent organization (some people prefer to work routine, rather than the challenge of diverse projects); § Maximum flexibility in the use of staff; § Individual experts can be utilized by many different projects; § Specialists in the division can be grouped to share knowledge and experience (home for technical expertise); § The functional division also serves as a base of technological continuity when individuals choose to leave the project; § The functional division contains the normal career path for individuals whose expertise is in the functional area.

The Project as a Part of the Functional Organization - DISADVANTAGES § The project is not the focus of activity and concern (particularly when the work has moved to another department); § Poor integration across functional units; § There are often several layers of management between the project and the client (no single point of responsibility); § It generally takes longer to complete projects (departmental work may take priority over project work); § The motivation of people assigned to the project can be weak.

The Project Team Principle Company Management Project Manager The Project Team Members Non-project Departments Adopted from Dennis Lock

Project Organization for Manufacturing Company Board of Directors Project Manager Marketing Manager Engineering Manager Materials Manager Sales and marketing departments Engineering design and drawing departments Purchasing, expediting, goods inwards and stores Production Manager Factory departments and other production services HR Manager Recruiting, staff recording and other personnel services IT Manager Cost and management accounting, payroll, bought and sales ledger Adopted from Dennis Lock

Pure Project Organizations ADVANTAGES § The project manager has full line authority over the project; § Projects tend to get done more quicker; § A project team that has a strong and separate identity and develops a high level of commitment from its members; § It promotes more effective communication between the project manager and the team members;

Pure Project Organizations ADVANTAGES § Swift decision making; § When there are several successive projects of a similar kind, the pure project organization can maintain a permanent cadre of experts who develop skills in specific technologies; § The organizational structure tends to support a holistic approach to the project.

Projectized Organizational Structure Central Engineering Systems, Inc. President Marketing Other Projects HR Finance and administration Manufacturing Other Projects Beta Project Manager Alpha Project Manager Engineering Legal Procurement Engineering Manufacturing Adopted from Grey and Larson Subcontractors Procurement

Pure Project Organizations DISADVANTAGES § Duplication of effort (when the parent organization running few projects concurrently); § Duplication of equipment and technical assistance; § Limited skills and knowledge; § Life after the project ends; § Sometimes dedicated project teams take an entity of their own and a disease known as projectitis develops.

SNAPSHOT FROM PRACTICE Projectitis: the Dark Side to Project Teams Steve Jobs, who was both the chairman of Apple and the project manager for the Mac team, pampered his team with the perks including at-the-desk massages, coolers stocked with freshly squeezed orange juice, a Bösendorfer grand piano and first-class plane tickets. No other employees at Apple got to travel first class. Jobs considered his team to be the elite of Apple and had a tendency to refer to everyone else as “Bozos” who “didn’t get it”. Engineers from the Apple II division, which was bread and butter of Apple’s sales, became incensed with the special treatment their colleagues were getting. One evening at Ely Mc. Fly’s local watering hole, the tension between Apple II engineers and Mac team boiled over. The Mac guys were screaming – “We are the future” and the Apple II guys were screaming – “We are the money”. Although a comical from a distance, the discord between the Apple II and Mac groups severely hampered Apple’s performance during the 1980 s. John Sculley, who replaced Steve Jobs as chairman of Apple, observed that Apple had evolved into two “warring companies” and referred to the street between Apple II and Macintosh buildings as “the DMZ” (demilitarized zone).

Matrix Organization for Manufacturing Company Management Project Director Manufacturing manager Engineering manager Project Manager A 6 3 Project Manager B 3 1 Project Manager C Project Manager D Production manager Marketing manager 2 1 3 4 2 1 Other Departments (non project) Accountants HR department Printing Maintenance Security Catering Adopted from Dennis Lock

The Matrix Organization The matrix organization is a combination of functional and pure project. A matrix organization can take on a wide variety of specific forms depending on relative authority of project and functional managers: § “Strong” matrix organization most resembles the pure project organization. § “Weak” matrix most resembles the functional form. § The “balanced” matrix lies in between the others.

Weak Matrix and Balanced Matrix Project Coordination Chief Executive Functional Manager Staff Staff Staff Project Coordination Functional Manager Chief Executive Functional Manager Staff Staff Project Manager Staff PMBOK, 2000

Division of Project Manager and Functional Manager Responsibilities in a Matrix Structure Project Manager Negotiating Issues Functional Manager What has to be done? Who will do the task? How will it be done? When should be done? Where will the task be done? How much money is available to do the task? Why will the task be done? How will the project involvement impact normal functional activities? How well has the total project been done? Is the task satisfactory completed? How well has the functional input been integrated?

The Matrix Organization - ADVANTAGES § A strong project focus; § Response to client’s needs is as rapid as in the pure project organization; § Access to the reservoir of technology in all areas; § Flexible utilization of resources and expertise within the firm; § There is less anxiety about what happens when the project is completed.

The Matrix Organization DISADVANTAGES § The balance of power between the project and functional areas is very delicate; § The movement of resources from project to project may foster political infighting; § Problems associated with shutting down projects can be as severe as in a pure project organization; § Violation of principle - “unity of command”; § Decision making can bogged down.

Mixed/Hybrid Organizational Systems Matrix and pure project organizations may coexist in a firm Advantages of a mixed organization: § The hybridization of the mixed form leads to flexibility; § The firm is able to meet special problems by appropriate adaptation of its organizational structure. § Disadvantages include: § Dissimilar groupings within the same accountability center tend to encourage overlap, duplication, and friction because of incompatibility of interests; § Conditions still exist that result in conflict between functional and project managers.

Hybrid Organization in a Large Company Managing Director of projects Project services Manager Construction manager Client A Project manager A Site manager A Client B Project manager B Site manager B Client C Project manager C Site manager C Client D Client E Director of technology Chief civil engineer Chief structure engineer Chief fluids engineer Chief electrical engineer Project D Project E Nonproject departm ents

Organizing Project within Virtual Organizations Corporate downsizing and cost control have combined to produce virtual organizations. Virtual organization is an alliance of several organizations for the purpose of creating products and services for customers. Mostly operate in an electronic environment.

Example of Virtual Project Marketing firm Tool & dye firms Parts supplier Advertising firm Mountain bicycle Inventor Manufacturer Bicycle Company Project Manager Adopted from Larson & Grey

Organizing Project within Virtual Organizations Advantages: § Cost reduction; § A high level of expertise and technology; § Flexibility. Disadvantages: § Coordination of professionals from different organizations may be challenging; § There is a potential to loss of control over the project; § Are more prone to interpersonal conflicts.

Organizational Structure Project Characteristics Matrix Functional Weak Matrix Balanced Strong Matrix Projectized Project manager’s authority Little to none Limited Low to moderate Moderate to high High to almost absolute Percentage of performing organization’s personnel assigned full time to project work Virtually none 0 -25% 15 -60% 50 -95% 85 -100% Project manager’s role Part-time Full-time Common titles for Project manager’s role Project Coordinator/ Project Leader Project Coord/ Project Leader Project Mgr/ Project Coord Project Mgr/Prog manager Project management administrative work Part-time Full-time

Choosing an Organizational Form Selecting the organizational interface between the project and the firm is a difficult task. § The choice is determined by the situation, but is also partly intuitive. § Must consider the nature of the potential project, the characteristics of the various organization options, the advantages and disadvantages of each, the cultural preferences of the parent organization, and then make the best compromise that can be made.

Factors Influencing Project Structure Hobbs & Menard in G&L, p 72 -3 Size of project Strategic importance Novelty and need for innovation Need for integration Environmental complexity Budget and time constraints Stability of resource requirements

Choosing an Organizational Form Criteria for the selection of a project organization: 1. Define the project with a statement of the objective/s that identifies the major outcomes desired. 2. Determine the key tasks associated with each objective and locate the units in the parent organization that serve as functional “homes” for these types of tasks. 3. Arrange the key tasks by sequence and de-compose them into work packages.

Choosing an Organizational Form Criteria for the selection of a project organization (cont. ): 4. Determine which organizational units are required to carry out the work packages and which units will work particularly closely with which others. 5. List any special characteristics or assumptions associated with the project. 6. In light of items 1 -5, and with full cognizance of the pros and cons associated with each structural form, choose a structure. By David G. Knichel

What is Organizational Culture? • Organizational Culture refers to a system of shared norms, beliefs, values and expectations which bind people together, thereby creating shared meanings. • Organizational Culture, in its simplest meaning, is the sum total of how an organisation accomplishes all that it has to do to fulfill its purpose or mission (Sanchez, 2004). • Organizational Culture is the pattern of basic assumptions accepted and used by the organization (Schein, 1985)

Organizational Culture • Culture performs several important functions in organization: • • Provides a sense of identity Helps to legitimize the management system Clarifies and reinforces standards of behaviour Helps create social order

SNAPSHOT FROM PRACTICE Software development teams and Microsoft

Characteristics of Organizational culture Job 1. Member identity Organization 2. Team emphasis Individual 3. Management focus Task Independent Loose Low 4. Unit integration 5. Control 6. Risk tolerance 7. Reward Criteria 8. Conflict tolerance Low 9. Means-ends orientation Internal People Interdependent Performance Means Group 10. Open-system focus Tight High Other High Ends External

References: 1. 2. 3. 4. 5. 6. 7. 8. Burke, R. (2010). Fundamentals of Project Management: Tools and Techniques. Burke Publishing. (chapter 24). Burke, R. (2003). Project Management: Planning and Control Techniques. 4 th edition, Wiley: West Essex. (chapters 19, 20). Cadle, J. & Yeates, D. (2004). Project Management for Information Systems. 4 th edition, Prentice Hall. (chapters 1, 4). Keeling, R. (2000). Project Management: An International Perspective. Macmillan Business. (chapter 6). Larson, C. & Grey, E. (2008). Project Management: The Managerial Process. 4 th edition, Mc. Graw Hill. (chapter 3). Lock, D. (2003). Project Management. 8 th edition, Gower. (chapter 2). Mantel, S. , Meredith, J. , Shafer, S. & Sutton, M. (2005). Core Concepts of Project Management in Practice. John Wiley & Sons, Inc. (chapter 2). Meredith, J. & Mantel, S. (2003). Project Management: A Managerial Approach. 5 th edition, Wiley. (chapter 4).